CHAPTER 2
Comments from the supplementary Reports of the Statutory Auditors

The Statutory Auditors (Chartered Accountants) are required to furnish a detailed report, in long form, upon various aspects including the internal control systems of the functioning of the Company audited in accordance with the directions issued by the Comptroller and Auditor General of India to them under Section 619(3)(a) of the Companies Act, 1956 and to identify areas which needed improvement.

An illustrative resume of major recommendations made or opinion expressed or comments made by Statutory Auditors on possible improvement in the accounts and system of control in some of the 275 Central Government Companies and 86 Deemed Government Companies in existence as on 31 March 2001 and audited by them, is given below:-

2.1    SYSTEM OF FINANCIAL CONTROL AND ACCOUNTS

 

NAME OF THE MINISTRY/COMPANY

AREA FOR IMPROVEMENT
Department of Bio Technology
2.1.1 Bharat Immunologicals and Biologicals Corporation Limited
  1. System of recording procurement and disposal of stores was not implemented properly. Resultantly, many discrepancies were found during the physical verification of stores.
  2. Capital work-in-progress and advances on capital accounts amounting to Rs.1.12 crore and Rs.21.32 lakh were outstanding since long and needed proper action.
  3. Confirmation certificates for loan and interest were not available. Therefore, accuracy of the interest chargeable on the term loan and its impact on accounts could not be commented upon.
  4. An amount of Rs.16.24 lakh received in excess share application money had been utilised in contravention of provisions of the Companies Act, 1956.
  5. Value of stock of scrap and waste at the year end had not been determined in accordance with Accounting Standard (AS)-2.
  6. System of preparing proper records viz. goods issue register, issue indents, stock register/inventory of material/goods lying at project site was not followed properly.
  7. Company did not have any system of physical verification of material lying at project site.
2.1.2 Indian Vaccines Corporation Limited
  1. Accounts were prepared on the principles of ‘Going concern’ despite the project for which the Company was formed, had not been implemented since 1992 and was also unlikely to be completed.
  2. Company did not follow AS-1 and 10.

MINISTRY OF CHEMICALS AND FERTILIZERS
Department of Chemicals and Petro-Chemicals
2.1.3 Hindustan Organic Chemicals Limited Delegation of power had not been reviewed and revised since 1976.
2.1.4 Indian Petrochemical Corporation Limited
  1. Swap Transactions (FOREX-Finance) were accounted for at the end of the year instead of at the time of settlement.
  2. System of timely recovery of outstanding dues had not been effectively followed with the change of the market scenario.
  3. Three remittances-in-transit amounting to Rs.1.31 crore transferred by SBI Ludhiana to IPCL (HO) Vadodara in November 2000 remained unlinked on 31 March 2001. Further, one SBI, Ludhiana demand draft dated 24 August 1998 for Rs.41801 also remained unlinked on 31 March 2001.
  4. There were deficiencies and inadequacies in the system of internal control and internal checking in respect of authentication of journal vouchers, credit/debit notes for rebate, discount and freight. The accuracy and authenticity of the debit and credit notes and journal vouchers were not verified by the subsequent officer.
2.1.5 U. P. Drugs & Pharmaceuticals Limited
  1. Trial balance was not drawn periodically. This needed to be drawn up quarterly.
  2. Compilation of accounts needed to be done half yearly instead of at year end.
  3. Control accounts and subsidiary accounts needed to be reconciled quarterly instead of on yearly basis.
  4. There was no system of downward delegation of financial powers below Managing Director.
Department of Fertilizers
2.1.6 Fertilizers and Chemicals Travancore Limited The Company made deviation from AS-2 (valuation of inventories) and AS-10 (accounting for fixed assets) in the following cases:
  1. Cost of inventory included administrative and other overheads incurred at each unit which did not contribute in bringing the inventories to their present location and condition. These items had to be excluded from the cost of inventory.
  2. Engineering divisions of the Company had included the administrative overheads and idle time in the value of capital works executed by them for other divisions of the Company. This resulted in over-statement of capital expenditure accounted for by the other divisions of the Company and recognition of income under the head ‘services for own unit’.
2.1.7 National Fertilizers Limited
  1. In the case of receipt of stores on purchase, the process of material inspection took abnormal time ranging between four weeks to four months, this required improvement in the system.
  2. In the following cases, the accounting policies of the Company were not in conformity with the Accounting Standards: a) Stand by equipment and servicing equipment pulled out on replacement and machinery spares already put to use were valued and included in inventory on the basis of own technical assessment plus cost incurred on reconditioning instead of depreciating such asset over the residual useful life of respective plant and machinery. This practice was not in conformity with AS-10. b) Escalation claims for input cost variation had been accounted for on estimation basis.
2.1.8 Projects Development India Limited
  1. There was a considerable time lag between the date of completion of job and actual invoicing due to execution of jobs at various places and delay in receipt of billing advice from the inspecting units. A system of sending the billing advice and inspection certificate immediately after completion of the jobs needed to be developed so that the invoice could be raised without any delay.
  2. Valuation of inventories of raw materials and work-in-progress had been done at cost instead of at lower of cost or net realisable value as required under AS-2.
  3. Periodicity of drawing trial balance was not fixed.

MINISTRY OF COAL AND MINES
Department of Coal
2.1.9 Neyveli Lignite Corporation Limited Following deficiencies reported in the earlier years persisted in recording, procuring and disposal of stores:
  1. Delay in preparation of Inspection-cum-receipt Report (IRR) after receipt of materials and transport memorandum.
  2. In some cases even after consumption of materials, the receipt and consumption were not recorded in stores ledger due to non-preparation of IRR.
  3. Delay in accounting the physical verification differences. The differences were not intimated periodically to the Accounts department for taking timely action.
  4. Control and subsidiary accounts in respect of sundry creditors for stores and staff advances and payroll related accounts, were not reconciled periodically.

MINISTRY OF COMMERCE & INDUSTRY
2.1.10 Indian Trade Promotion Organisation
  1. Company took an inordinately long time in settling invoices with third parties. Total outstanding dues in respect of third party fairs as on 31 March 2001 stood at Rs.8.72 crore.
  2. In case of Indian Airlines Limited, recovery of licence fee, sharing of sale of ticket at gate and recovery of electricity/water charges etc. was based on the agreement which expired in November, 1999.
  3. As on 31 March 2001, an amount of Rs.2.31 lakh with foreign banks remained unconfirmed. In some cases, balances as per foreign bank statement did not tally with the books maintained by the Company.
  4. As on 31 March 2001, an amount of Rs.6.28 lakh credited by the Indian banks was pending adjustment for want of details.
  5. Company had charged Rs.3.85 crore to revenue on account of contribution made for construction of Chennai Trading Centre.

MINSTRY OF COMMUNICATION
Department of Telecommunications

2.1.11 Intelligent Communications Systems (India) Limited

No system for delegation of financial powers existed in the Company.

2.1.12 Videsh Sanchar Nigam Limited

Staff advances of Rs.40.10 lakh were lying unreconciled and unconfirmed. Necessary action was required to reconcile the said amount and obtain confirmation from the staff members.

MINISTRY OF DEFENCE
Department of Defence Production & Supplies

2.1.13 Bharat Electronics Limited

The Company did not prepare division-wise Accounts.

MINISTRY OF FINANCE

Department of Banking

2.1.14 Zenith Securities and Investments Limited

Company did not have a stop loss limit and proper monitoring of the market price of investments.

MINISTRY OF HEALTH & FAMILY WELFARE

2.1.15 Hindustan Latex Limited

System of drawing trial balance periodically was not followed.

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES

2.1.16 Bharat Heavy Electricals Limited

Under centralised cash management scheme of the Company following old outstanding entries as on March 31 2001 were continuing:

  1. Credits of Rs.1.04 crore and debits of Rs.1.81 crore made by the Company were not responded to by the banks.

  2. Debts of Rs.1.43 crore and credits of Rs.0.69 crore made by the banks in the Company’s account were not entered in the books of the Company.

2.1.17 Engineering Projects (India) Limited

  1. Trial balances in some of the closed projects were not prepared periodically and were prepared only at the end of the year.

  2. Materials issued by the client and issued to the associates were not reconciled periodically and regularly but only at the close of the contract.

  3. Company was charging all material and spares and stores, (other than cement and steel) to revenue in the year of purchase, even though the same might not be utilised in that year. This consequently enhanced the cost of the contract which resulted in advance booking of expenditure and profit thereon while calculating work-in-progress.

2.1.18 Instrumentation Limited, Kota

Accounting policies were not in conformity with the Accounting Standards in respect of treatment of revenue recognition of sales, treatment of encashment of leave of the employees and treatment of valuation of inventory.

2.1.19 Mining & Allied Machinery Corporation Limited

No bank statements and balance confirmation certificates were procured in respect of thirteen banks whose aggregate balance was Rs. 16.23 lakh.

2.1.20 Triveni Structurals Limited

Company did not follow AS-11 for the effects of changes in foreign exchange rates which resulted in over-statement of loss by Rs.73.77 lakh (net) and under-statement of sundry debtors and current liabilities by Rs.94.57 lakh and Rs.20.80 lakh respectively.

MINISTRY OF HUMAN RESOURCES & SCIENCE AND TECHNOLOGY

2.1.21 Educational Consultants (India) Limited

  1. System of recording of receipts and expenditure needed to be streamlined as many such items were booked on the last day of the accounting year. The same needed to be booked as and when they occurred.

  2. The Company had not complied with AS-9 in respect of KVS projects phase-I by accounting for Rs.6.82 crore as income and Rs.6.57 crore as expenditure on despatch of the goods from the supplier’s premises whereas no delivery and installation had been completed till 31 March 2001. Similarly in respect of KVS Project phase-II, Rs.3.23 crore as income and Rs.3.13 crore as expenditure had been accounted for on delivery of goods at client’s premises whereas no installation had been completed as per agreement till 31 March 2001.

MINISTRY OF NON-CONVENTIONAL ENERGY SOURCES

2.1.22 Indian Renewable Energy Development Agency Limited

Accounting policy for accounting of certain items of income and expenditure on cash basis was not as per AS-9.

MINISTRY OF PETROLEUM AND NATURAL GAS

2.1.23 Bharat Petroleum Corporation Limited

  1. Rs.45.33 crore was outstanding for more than three years payable to other oil companies in respect of product exchange and other charges. Reconciliation of transactions had been made with the Indian Oil Corporation Limited up to 1995 and with Hindustan Petroleum Corporation Limited up to 1992.

  2. In the bank reconciliation statement at the end of 31 March 2001, debits for Rs.65.65 crore and credits for Rs.62.66 crore credits were pending for reconciliation for over six months.

2.1.24 Oil & Natural Gas Corporation Limited

  1. Reconciliation between inter-office accounts between units needed to be strengthened particularly in respect of employees related accounts; i.e. loans and advances, interest accrued thereon, employees related libilities etc.

  2. Updation of the control accounts subsidiary accounts and the reconciliation process needed to be strengthened particularly in respect of inventories, fixed assets and employee advances. Corrective action needed to be taken promptly and regularly.

MINISTRY OF POWER

2.1.25 National Hydro-electric Power Corporation Limited

  1. In respect of Uri project, there was an accumulation of dead inventory in the three years of commercial production. This needed to be looked into.

  2. In respect of Salal project and Dulhasti project, physical disposal of items after these were identified as disposable was not done, which resulted in accumulation of slow moving and dead items in the stores.

  3. In respect of Salal project, there was difference in the bank accounts pertaining to the prior-period.

  4. A number of transactions were lying un-reconciled/unadjusted for a long period at Head office.

2.1.26 Power Finance Corporation Limited

System of recording of receipts & expenditure was deficient in view of the following:-

  1. No supporting documents were attached with the vouchers of disbursement and recovery.

  2. Most of the vouchers were un-narrated.

2.1.27 Tehri Hydro Development Corporation Limited

  1. Accounting policy regarding treatment of expenditure on rehabilitation and resettlement of oustees was ambiguous as it did not clearly state as to where the expenditure was to be capitalised.

  2. Materials which were in the joint custody of the company’s engineer-in-charge and contractors were not physically verified.

MINISTRY OF RAILWAYS

2.1 28 Container Corporation of India Limited

  1. At Inland Container Depot (ICD), Tondiarpet (southern region), the reconciliation between the ‘Depository Register’ maintained at the counters and ‘Advance from customers Account’ had not been completed and was under process.

  2. Accounting of freight and handling income/expense had been done on cash basis, which was not in consonance with Section 209 of the Companies Act, 1956 and AS-9.

2.1.29 Konkan Railway Corporation Limited

There were delays in bringing on record expenditure and receipts. Income recognition procedure needed further tightening specifically the interest on advances and others to be recovered from contractors etc.; Following accounting policies were in deviation of Accounting Standards:

  1. Non-bifurication of land into freehold land and leasehold land.

  2. Interest and finance charges after the assets were completed and put to use had been capitalised.

  3. Non-amortisation of leasehold land over the life of lease.

  4. Depreciation on fixed assets was generally charged at the rate prescribed in Companies Act, 1956 except some of the assets for which depreciation had been charged based on the life of the assets concerned as per Indian Railway Manual.

  5. Non-compliance of AS-2 with respect to net realisable value.

MINISTRY OF SHIPPING 

2.1.30 Cochin Shipyard Limited

Since no proper stock registers were maintained, the discrepancy, if any, was not ascertainable in respect of sub-stores for ship repairs.

MINISTRY OF SMALL INDUSTRIES AND AGRO & RURAL INDUSTRIES

2.1.31 National Small Industries Corporation Limited

  1. Treatment of certain expenses/income on cash basis was not in accordance with the provisions of Section 209 of the Companies Act, 1956.

  2. As per policy of the Company, debtors/receivables were shown as secured on the basis of original value of security instead of present market/realisable value of such securities.

  3. No market survey had been conducted for each exhibition as evidenced from the records and in 3 exhibitions, the recovery of participation fee had been found to be marginal.

  4. In case of Hanuman Oil Mills, the amount advanced was more than the sanctioned limit.

  5. Norms for provision for doubtful debts were inadequate keeping in view their age, rate of recovery and lack of adequate security.

  6. System of monitoring of debts was not adhered to in full. As a result, the debtors/receivables were outstanding for long and the rate of recovery had been quite low.

  7. No system was followed for physical verification of imprest on regular/periodical basis.

  8. No system of doing reconciliation between the fixed assets register and the financial books existed.

MINISTRY OF SOCIAL JUSTICE AND EMPOWERMENT

2.1.32 Artificial Limbs Manufacturing Corporation of India Limited

Loss/profit, if any, on disposal of obsolete/surplus inventories/ fixed assets and insurance claims received were accounted for on cash basis instead on accrual basis.

2.1.33 National Backward Classes Finance and Development Corporation Limited

  1. There had been delay, in adjustment of advances given for various nature of expenses.

  2. A scheme-wise and sector-wise loans register needed to be maintained by the Company.

2.1.34 National Minorities Development & Finance Corporation Limited

  1. Company did not have a well-defined system of control and subsidiary accounts. Its accounting system did not generate subsidiary accounts in certain cases.

  2. Accounting policies followed by the Company were not in consonance with the Accounting Standard regarding accounting of fixed assets, the delayed interest and liquidated charges which were accounted for on cash basis.

MINISTRY OF STEEL

2.1.35 Bharat Refractories Limited

Company had no specific system of regularly identifying and monitoring disposal of non-moving, obsolete or surplus raw materials, stores & stores and finished goods.

2.1.36 Heavy Engineering Corporation Limited

  1. Revenue had been recognised as sales against interest amounting to Rs.6.80 crore on disputed claim receivable from customers which was not in accordance with AS-9.

  2. Building at Kolkata (Rs.54.81 lakh) had been capitalised during the year 2000-2001 but the title deed had not been executed in favour of the Company.

2.1.37 Sponge Iron India Limited

Fixed assets were overstated by Rs.8.49 crore due to capitalisation of pig iron plant as on 1 April 1999 instead of January 1996 (when the same was ready for commercial operation) and the revenue expenditure of Rs.8.49 crore incurred in modification of plant during the period January 1996 to March 1999 should have been charged off to Profit and Loss account instead of its capitalisation. This resulted in under-statement of loss for the year by Rs.13.13 crore.

2.1.38 Steel Authority of India Limited

System needed to be strengthened particularly in case of identification and disposal of obsolete, slow moving and surplus materials.

MINISTRY OF SURFACE TRANSPORT

2.1.39 Indian Road Construction Corporation Limited

Company had not complied with the AS-11 for the balance sheet items of all the closed foreign projects, which had been kept freezed in Indian Rupees. Due to this, the gain/loss, if any, had neither been determined nor provided in the accounts.

2.1.40 Shipping Corporation of India Limited

  1. Control and subsidiary accounts in respect of liner freight were in arrears from 1998-99.

  2. Reconciliation of stores and spares in transit, which included stores/spares supplied to vessels had been completed only upto 1993-94.

MINISTRY OF TEXTILES

2.1.41 Cotton Corporation of India Limited

Officer in charge of Delhi Branch operated cash imprest of Rs.19.80 lakh without any delegation.

2.1.42 National Textile Corporation (Gujarat) Limited

  1. In the Rajnagar Mill, control accounts were not reconciled periodically with the stores, time-keeping, sales and purchase departments.

  2. In the Petlad Mill, reconciliation statement with Bank of Baroda (Petlad) was not prepared for the year 2000-2001. Further, cash credit and current account for the year 2000-2001 were not reconciled.

2.1.43 National Textile Corporation (UP) Limited

  1. Balances of sundry creditors, personal advances, insurance claims, sundry debtors, loans and advances (including subsidiaries), security and other deposits were not reconciled/confirmed as on 31 March 2001.

  2. Company did not have a qualified Company Secretary as required under Companies Act, 1956.

MINISTRY OF TOURISM

2.1.44 India Tourism Development Corporation Limited

  1. System of recording the sales was inadequate (Hotel Kanishka, New Delhi).

  2. System of drawing trial balances at regular intervals was not in vogue. (Hotel Janpath, New Delhi; Hotel Agra Ashok, Kosi Restaurant, Bharatpur Forest Lodge, Hotel Patliputra Ashok, Patna; Hotel Indraprastha, New Delhi; Lodhi Hotel, New Delhi; Project & Engineering Division, New Delhi and Corporate office).

  3. Frequency of reconciliation of bank accounts was not adequate (Hotel Agra Ashok, Taj Restaurant, Kosi Restaurant, Ashok Tours & Travels, Agra and Bharatpur Forest Lodge).

MINISTRY OF URBAN AFFAIRS AND EMPLOYMENT

2.1.45 National Buildings Construction Corporation Limited

  1. Material consumption was accounted for only at the end of the year.

  2. Accounting policies were not in conformity with the Accounting Standards in the following cases:
    (a) Claims and variations arising under construction contracts were not accounted for strictly as per AS-7.
    (b) Contrary to AS-7, no provision had been made for foreseeable losses and expected expenditure during the remaining maintenance period in respect of the projects.
    (c) Contrary to AS-9, the Company had accounted for interest of Rs.24.87 crore towards amount receivable under deferred payment agreement between Government of India and Government of Iraq though the same was not renewed since 1991.

  3. Subsidiary ledgers of Piece-rated Workers (PRWs), suppliers and sub-contractors were not reconciled at units with financial records maintained at Zones.

  4. Recovery of dues in closed projects was very slow.

2.2    ASSETS AND INVESTMENTS

Department of Bio-Technology
2.2.1 Indian Vaccines Corporation Limited Fixed asset register were not reconciled with financial books since no entries had been made in respect of depreciation

MINISTRY OF CHEMICALS AND FERTILIZERS

Department of Chemicals and Petro-chemicals

2.2.2 Hindustan Antibiotics Limited

Company had not revalued its investment in subsidiaries to recognise permanent diminution in value of long term investment as required by AS-13.

2.2.3 Indian Petrochemical Corporation Limited

  1. Two plants of Vadodara Complex namely, Aromatic Plant and Polymer Plant were not in operation for more than 5 years and 2 years respectively. The written down value of these plants as on 31 March 2001 was Rs.42.64 crore.

  2. No activity had been carried out for the new projects namely, CAN & MMA/PMA at Gandhar and Cracker-LDPE at Vadodara Complex since 1996-97. The Company had incurred a sum of Rs.13.33 crore towards such projects, which had been shown under the Capital work-in-progress.
Department of Fertilizers

2.2.4 Fertilizers and Chemicals Travancore Limited

Details of certain assets had not been given in the Fixed Assets Register and not reconciled with the quantity on physical verification.

2.2.5 National Fertilizers Limited

  1. Company had capitalised certain assets on the basis of technical assessment of being ready for put to use notwithstanding the fact that the trial run was pending completion and property in goods had not been transferred in favour of the Company.

  2. System of recovery of outstanding required improvement as sundry debtors and loan & advances amounting to Rs.321.90 crore were outstanding as on 31 March 2001.

  3. Company had no investment policy.

2.2.6 Projects Development India Limited

  1. The location of fixed assets and distinctive number of the assets were not recorded in the fixed asset registers.

  2. Despite the Company having a monitoring system of outstanding dues, recoveries of old dues were not forthcoming. As on 31 March 2001, Sundry debtors included Rs.6.48 crore which were outstanding for more than 3 years. Effective steps were needed to be taken by the Company.

  3. Company did not have any investment policy.

  4. Debtors included claims of Rs.27.50 lakh towards extra services rendered by the Company in the year 1999-2000 over and above the contractual value which were yet to be accepted by the clients.

MINISTRY OF COAL AND MINES

Department of Coal

2.2.7 South Eastern Coalfields Limited

Advances outstanding for a long period amounted to Rs.1.43 crore (Hasdeo area) comprising

  1. stores issued to contractor on loan-Rs.18.39 lakh

  2. advance to contractor-Rs.6.87 lakh

  3. stores advances - Rs.1.18 crore.

MINISTRY OF COMMERCE & INDUSTRY

2.2.8 Export Credit and Garantee Corporation of India Limited

Location of assets and its quantity in Head Office was not ascertainable from the Register.

2.2.9 India Trade Promotion Organisation

  1. No physical verification of fixed assets was conducted after 1998-99.

  2. No cycle had been fixed for physical verification of fixed assets.

  3. Seggregation of serviceable and unserviceable assets was not carried out by the Company.

  4. A number of exhibits lying at Chennai office were not recorded in the register maintained there. Even the TV and VCR lying at Chennai office had not been recorded in the Fixed Assets register.

2.2.10 PEC Limited

Bank guarantee register was not properly maintained. The unexpired bank guarantee as per bank guarantee register as on 31 March 2001 were not tallied with details of expired bank guarantees as on 31 March 2001 provided by the banks.

MINISTRY OF COMMUNICATIONS 
Department of Telecommunications

2.2.11 Intelligent Communications Systems (India) Limited

Company had not laid down any investment policy.

MINISTRY OF DEFENCE

2.2.12 Bharat Dynamics Limited

There were overdue inter corporate deposits amounting to Rs.4.65 crore (principal: Rs.2.76 crore plus interest: Rs.1.89 crore) from three PSUs which were referred to BIFR.

2.2.13 Hindustan Aeronautics Limited

  1. Assets register of Aircraft Division was not up to date.

  2. There was no laid down policy for investment.

2.2.14 Mazagaon Dock Limited

Company had not used the assets valuing Rs.1.67 crore for more than 3 years.

MINISTRY OF FINANCE

2.2.15 Allbank Finance Limited

Company considered 97.83 per cent of its Sundry Debtors as doubtful.

2.2.16 BOB Cards Limited

Non-performing assets increased by 244 per cent (i.e. from Rs.4.48 crore to Rs.15.40 crore) even though turnover had increased by 6.5 per cent only

2.2.17 BOB Housing Finance Limited

Cash and imprest balances were not physically verified during the year on a regular basis by an authorised officer.

2.2.18 General Insurance Corporation of India Limited

Ratio of non-performing corporate debts to total corporate debts increased from 9.15 per cent in 1998-99 to 14.99 per cent in 2000-01.

2.2.19 Oriental Insurance Company Limited

Non-performing assets in consortium loans were 43.31 per cent for term loans, 12.34 per cent for debentures and 100 per cent for short term loans.

2.2.20 PNB Capital Services

  1. Investment in shares of other bodies corporate was in excess of the limit as allowed by Section 372 of the Companies Act, 1956.

  2. Some of the investments, loans and advances were in excess of the ceiling specified in the directions existing on the date of commencement of NBFC prudential norms (Reserve Bank) directions, 1998.

  3. Investment policy had not been drawn/revised keeping in view the requirement of Section 372 of the Companies Act, 1956 and NBFC prudential Norms (RBI) directions, 1998.

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES

2.2.21 Bharat Heavy Electricals Limited

  1. In the case of Power sector, Northern Region and Power Sector Western Region, no delegation for fixing the dates of installation and commissioning of plant and machinery was given to any authority.

  2. In the case of Jhansi Unit, the date of installation and commissioning of individual plant and machinery had not been fixed.

  3. Company had a system of monitoring the recovery of outstanding dues on regular basis except for Industrial Valve Plant, Goindwal Unit where vigorous efforts were required to be made for recovery for old outstanding.

  4. In some units, timely recovery of outstanding dues was not forthcoming in number of cases, mostly Government agencies. In certain units, even TDS certificates were outstanding for which provision had to be made in the Books of Accounts.

2.2.22 Engineering Projects (India) Limited

  1. Amounts of Rs.12.52 crore and Rs.1.30 crore were deducted by the clients of the Company towards liquidated damages and interest on advances respectively. However, the same were kept under sundry debtors as the Company was of the opinion that the amounts were recoverable from the clients.

  2. Cash and imprest balances were not physically verified during the year on regular basis by an authorised officer at some of the contract sites.

2.2.23 Jessop & Co. Limited

  1. System of monitoring timely recovery of outstanding dues was not adequate. Recovery process of long outstanding dues was poor.

  2. Company made no efforts to get refund of earnest money of Rs.0.30 crore desposited for submitting tenders for order.

2.2.24 National Bicycle Corporation of India Limited

Surplus land of 321,493 sq.mtr. (Ghaziabad) was lying vacant since May 1998.

2.2.25 Scooters India Limited

Company did not have any laid down norms for investment policy.

2.2.26 Triveni Structurals Limited

Fixed Asset register had not been completed for the assets acquired prior to 1979-80 and needed to be completed.

MINISTRY OF HEALTH AND FAMILY WELFARE

2.2.27 Hindustan Latex Limited

No physical verification of the fixed assets were conducted at Corporate Head Office, Trivandrum and Liaison Office, New Delhi and consequently not reconciled with financial books kept at these centres.

2.2.28 Dadra and Nagar Haveli ST&SC, OBC & Minorities Financial & Development Corporation Limited

Principal of Rs.2.02 crore and interest of Rs.15.28 lakh were overdue from the beneficiaries.

MINISTRY OF INFORMATION TECHNOLOGY
Department of Electronics
2.2.29 National Informatic Centre Services Inc. No investment policy had been laid down by the Company during the year.
2.2.30 Semi-Conductor Complex Limited Company had not laid down policy for investments.

MINISTRY OF PETROLEUM AND NATURAL GAS

2.2.31 Bongaigaon Refinery & Petrochemicals Limited Persons authorised to hold the money did physical verification of imprest cash.
2.2.32 Certification Engineers International Limited Recovery of Sundry debtors was not adequate and the correspondence for the recoveries were not on the record.
2.2.33 Engineers India Limited Long outstanding doubtful debts were not being written off.
2.2.34 Indian Oil Corporation Limited Book value investments in quoted public sector undertaking bonds and shares was Rs.3128.31 crore, while the market value thereof as on 31 March 2001 as per the quotations available worked out to Rs.2354.45 crore.

MINISTRY OF POWER

2.2.35 Nathpa Jhakri Power Corporation Limited

Reconciliation between physical assets and books was yet to be completed.

2.2.36 National Hydro-electric Power Corporation Limited

  1. In respect of Tanakpur, the follow up of old outstanding dues in various heads (Rs.1.99 crore) was required to be taken up.

  2. Company had not laid down any investment policy.

  3. Investment had been made without obtaining the consent of the President of India as required under the Articles of Association of the Company.

  4. In case of investment in shares of Indian Overseas Bank, the diminution in the value had not been reflected in the books.

2.2.37 North Eastern Electric Power Corporation Limited

Fixed Assets registers were not posted up to date and reconciled in certain locations.

2.2.38 Power Grid Corporation of India Limited

Company had generally maintained record of fixed assets. However, such records did not, in some cases, give full particulars including location of fixed assets. The assets were not comprehensively numbered and identified in certain cases. The assets had been physically verified by external agencies at reasonable intervals and in number of cases, discrepancies noticed on such verification had not been reconciled/adjusted.

2.2.39 Tehri Hydro Development Corporation Limited

Some of the accounts under capital works-in-progress were still under reconciliation.

MINISTRY OF RAILWAYS

2.2.40 Konkan Railway Corporation Limited

There were cases of advances given to contractors who had deserted the work. The recovery on account of risk & cost transactions was not effected even if the work had already been completed.

MINISTRY OF SOCIAL JUSTICE AND EMPOWERMENT

2.2.41 Artificial Limbs Manufacturing Corporation of India Limited

Property and assets registers were not complete as same were under preparation.

2.2.42 National Back ward Classes Finance and Development Corporation Limited

  1. Property and Assets Registers had not been maintained properly.

  2. Company carried huge bank balances and investments in FDR, which indicated that the funds were not deployed for the purpose for which the Company had been set up.

2.2.43 National Minorities Development and Finance Corporation Limited

  1. Register of fixed assets needed to be reconciled with financial books.

  2. Company had no system of verifying imprest given to its staff.

  3. Company had not laid down any specific investment policy.

MINISTRY OF STEEL

2.2.44 Bharat Refractories Limited

  1. Fixed assets register had not been posted upto date and not reconciled with financial books by Bhilai Refractories Plant.

  2. Physical verification of fixed assets including plant & machinery, land & building and township had not been made in Forge Foundry Plant (FFP), Heavy Machine Tools Plant (HMTP) for the last several years.

MINISTRY OF SURFACE TRANSPORT

2.2.45 Indian Road Construction Corporation Limited

Sundry debtors amounting to Rs 15.46 crore were outstanding for more than 3 years, due to non-completion of various projects by the Company in Libya.

MINISTRY OF TEXTILES

2.2.46 Handicrafts and Handlooms Exports Corporation of India Limited

System of monitoring the timely recovery of outstanding dues from number of parties including foreign branches needed to be improved.

2.2.47 National Textile Corporation (Gujarat) Limited

In Petlad Mill, property and assets register was not updated and reconciled with the financial books.

2.2.48 National Textile Corporation (SM) Limited

  1. Fixed assets register was not completed and maintained properly.

  2. Bungalow at Napean Sea road and commercial building at Ballard Estate, Mumbai were in possession of unauthorised persons.

MINISTRY OF TOURISM

2.2.49 India Tourism Development Corporation Limited

  1. Fixed Assets register was not maintained properly at Hotel Samrat-New Delhi; Ashok Tours and Travels-New Delhi; Hotel Ashok Bangalore; Hotel Indraprastha-New Delhi, Hotel Manali Ashok-Manali; Hotel Jaipur Ashok-Jaipur; Laxmi Vilas Palace Hotel, Udaipur; and Bharatpur Forest Lodge.

  2. Balances as per fixed assets register were not reconciled with physical balances in some units (Hotel Samrat-New Delhi; Ashok Tours and Travels-New Delhi; Hotel Qutab-New Delhi; Hotel Ashok, Bangalore; Ashok Tours And Travels Bangalore; Hotel Indraprastha, New Delhi; Hotel Manali Ashok-Manali; Hotel Jaipur Ashok-Jaipur; Bharatpur Forest Lodge; Ashok Hotel-New Delhi; Duty Free Trade Division, New Delhi; Hotel Kanishka, New Delhi and Headquarters).

  3. Old outstanding debts were not being pursued in many units (Hotel Varanasi Ashok, Hotel Khajuraho Ashok, Ashok Tours And Travels Patna and Project and Engineering Division; New Delhi)

  4. Cash and imprest balances were not verified regularly at Hotel Patliputra Ashok-Patna and Airport Restaurant-Kolkata.

2.2.50 Madhya Pradesh Ashok Hotel Corporation Limited

  1. Assets register was not completed in respect of some of the assets. The assets mentioned in the register had not been reconciled with the physical verification.

  2. Out of the total Sundry debtors of Rs.34.57 lakh, a sum of Rs.14.10 lakh was outstanding for more than three years.

2.3    LIABILITIES AND LOANS

Department of Atomic Energy

2.3.1 Indian Rare Earths Limited

Company had defaulted in repayment of principal (Rs.52.40 crore) and interest thereon (Rs.110.27 crore) and penal interest of Rs.37.65 crore.
Department of Bio Technology

2.3.2 Bharat Immunologicals & Biologicals Corporation Limited

Company had defaulted in repayment of loans Rs.23.29 crore and interest Rs.29.71 crore and penal interest Rs.5.79 crore.

2.3.3 Indian Vaccines Corporation Limited

Advances to the tune of Rs.66.93 lakh were doubtful of recovery.

MINISTRY OF CHEMICALS AND FERTILIZERS

 Department of Chemicals and Petro-chemicals

2.3.4 Hindustan Antibiotics Limited

Company defaulted in repayment of loan - Rs.72.69 crore (principal) and Rs.52.55 crore (interest thereon) as on 31 March 2001.

2.3.5 Hindustan Organic Chemicals Limited

Company defaulted in repayment of secured bonds (Rs.24.50 crore), fixed deposit (Rs.2.05 crore), interest on bonds (Rs.15.99 crore) and interest on fixed deposit (Rs.2.76 crore) as at 31 March 2001

2.3.6 U P Drugs & Pharmaceuticals Limited

Company defaulted in the repayment of loan of Rs.6.16 crore and interest of Rs.14.20 crore.

Department of Fertilizers

2.3.7 Fertilizers and Chemicals Travancore Limited

Company defaulted in payment of Government of India loan of Rs.72.39 crore and interest of Rs.167.17 crore thereon. Besides these the penal interest for the default in repayment of Government loans amounted to Rs.4.83 crore for which no provision had been made.

2.3.8 Madras Fertilizers Limited

Defaulted loan amounted to Rs.77.60 crore and interest and penal interest thereon amounted to Rs.77.78 crore as on 31 March.2001.

2.3.9 Projects Development India Limited

As on 31 March 2001 the Company had defaulted in payment of loans of Rs.14.91 crore payable to Government of India (Rs.4.83 crore) and Fertiliser Corporation of India (Rs.10.08 crore) and interest to the tune of Rs.22.81 crore payable to Government of India (Rs.10.32 crore) and Fertiliser Corporation of India (Rs.12.49 crore). In addition, penal interest of Rs.18.95 lakh was also payable on Government of India loan.

MINISTRY OF COMMUNICATIONS

Department of Telecommunications

2.3.10 ITI Limited

Company defaulted in repayment of principal (Rs.13.55 crore) and payment of interest (Rs.14.42 crore).

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES

2.3.11 Bharat Heavy Electrical Limited

Guarantee fee including penal guarantee fee (Rs.100.51 crore) was payable to the Government of India.

2.3.12 Bridge & Roof Company (India) Limited

Company had defaulted in repayment of Government of India loan of Rs.9.20 crore and interest and penal interest of Rs.3.17 crore and Rs.22.01 crore respectively.

2.3.13 Instrumentation Limited

Revival plan of the Company was approved (December 1998) by BIFR. Accordingly, repayment of loans was rescheduled. However, default was made in repayment of secured/unsecured loan amounting to Rs.39.81 crore, interest Rs.14.85 crore and penal interest Rs.13.35 lakh.

2.3.14 Richardson & Cruddas (1972) Limited

Company defaulted in repayment of loan amounting to Rs.22.88 crore and interest Rs.11.06 crore.

2.3.15 Triveni Structurals Limited

Company defaulted in repayment of Government loans amounting to Rs.6.27 crore with interest thereon to the extent of Rs.3.62 crore and penal interest of Rs.7.81 crore.

MINISTRY OF PETROLEUM & NATURAL GAS

2.3.16 Oil India Limited

Company defaulted in payment of penal interest for pre-matured payment of World Bank loan to the tune of Rs.8.95 crore as the Company appealed for its waiver.

MINISTRY OF SMALL INDUSTRIES & AGRO AND RURAL INDUSTRIES

2.3.17 Artificial Limbs Manufacturing Corporation of India Limited

Corporation had not repaid loans of Rs.14.33 crore taken from Government of India, overdue interest of Rs.28.75 crore and penal interest of Rs.8.99 crore

MINISTRY OF SHIPPING

2.3.18 Cochin Shipyard Limited

As against Rs.41.07 crore consisting of three equal instalments of the interest free loan received from Government of India due for repayment, the Company had repaid only Rs.5 crore upto 31 March 2001.

MINISTRY OF SURFACE TRANSPORT

2.3.19 Hindustan Shipyard Limited

Company was a constant defaulter of repayment of loans and interest thereon. Even the payment of guarantee fee to Government of India was defaulted in few instances.

MINISTRY OF TEXTILES

2.3.20 National Textiles Corporation (Maharashtra North) Limited

Company defaulted in repayment of principal (Rs.747.74 crore) and interest (Rs.395.28 crore) as of 31 March 2001.

2.3.21 National Textiles Corporation (South Maharashtra) Limited

Company defaulted in repayment of principal (Rs.660.89 crore) and interest thereon (Rs.391.30 crore).

2.3.22 National Textiles Corporation (UP) Limited

Company defaulted in repayment of loans and interest to the tune of Rs.664.19 crore (Rs.8.31 crore to banks including interest of Rs.5.73 crore and Rs.655.87 crore to NTC Ltd. New Delhi).

2.3.23 North Eastern Handicrafts and Handlooms Development Corporation limited

Company defaulted in repayment of Government of India loan of Rs.9.47 crore.

MINISTRY OF URBAN AFFAIRS AND EMPLOYMENT

2.3.24 National Buildings Construction Corporation Limited

  1. Company defaulted in repayment of loans (Rs.17.10 crore) and interest thereon (Rs.36.64 crore) as on 31 March 2001.

  2. Company had a dispute with Canara Bank, as Canara Bank had unilaterally liquidated an Euro Dollar loan of US $8.75 million pertaining to an Iraqi project by converting it into a rupee loan of Rs.28.35 crore. Such conversion had not been agreed to by the Company and the case was pending in the Permanent Machinery of Arbitration.

2.4    INVENTORY AND CONTRACTING

(PSUs where maximum & minimum limits of stores and spares were not fixed and Economic Order Quantity was not prescribed have been given in Annexure-III)

Department of Atomic Energy

2.4.1 Nuclear Power Corporation of India Limited

Company had slow moving and surplus inventory of Rs.6.53 crore at Narora Atomic Power Station (NAPS) and Rs.9.78 crore at Madras Atomic Power Station (MAPS).

Department of Bio Technology

2.4.2 Bharat Immunologicals & Biologicals Corporation Limited

  1. The Company did not have a proper system of procurement and the following discrepancies were noticed :
    (a) Suppliers were not making the supplies in time but no action had been taken against them for want of penalty/liquidated damages clause in the purchase orders.
    (b) Inspection team/Quality control of the Company did not inspect the material before accepting the same in case of purchases made. The department did not inspect the material before despatch of the same in case of sales made by the Company resulting into a major rejection of material during the year.
    (c) Pre-qualification tenders for suppliers were not invited and purchases had been made mainly on the basis of limited enquiries.
    (d) Abnormal delay was observed in getting the advertisement published in the newspaper for various purchases.

  2. No norms were fixed for losses/wastages.

  3. Company did not have adequate system for regularly identifying and monitoring disposal of non-moving, obsolete or surplus raw material, finished goods and stores and spares.

MINISTRY OF CHEMICALS AND FERTILIZERS

 Department of Chemicals and Petro-Chemicals
2.4.4 Indian Petrochemicals Corporation Limited
  1. Under computerised system of accounting of material received in stores, entries in respect of liabilities for purchase were generated as soon as material was received taking the rate as per the purchase order. At the time of payment, purchase section verified the invoices and made deduction on account of late delivery etc. As a result, there remained a credit balance to party’s account after payment was made. The review process of closed purchase orders should be expedited so that the balances in respect of closed purchase orders were appropriately adjusted.
  2. Receipt of materials remained unaccounted due to pending inspection or for other minor procedures. In few cases, unaccounted material, which was physically issued and consumed in the respective plant, remained unaccounted for in the material ledger.
  3. When goods were purchased against the letter of credit and through banks and subsequently rejected, the advance to suppliers remains unadjusted.
2.4.5 Rajasthan Drugs and Pharmaceuticals Limited Company held surplus inventory of Rs.7.52 crore at Trombay unit, Rs.2.61 crore at Thal unit and Rs.2.69 crore as off-grade material.
2.4.6 U.P. Drugs & Pharmaceuticals Limited Company did not have system for regularly identifying and monitoring disposal of non-moving obsolete or surplus raw materials, stores and spares & finished goods.

MINISTRY OF COAL AND MINES

Department of Coal
2.4.11 Bharat Coking Coal Limited Advances to suppliers outstanding more than three years amounted to Rs.17.95 crore.
2.4.12 Neyveli Lignite Corporation Limited Non-moving stores for more than 3 years amounting to Rs.1.94 crore were lying as on 31 March 2001.
2.4.13 South Eastern Coalfields Limited Non-moving, obsolete, surplus raw materials, stores and spares not moved for more than three years were valued at Rs.6.43 crore (Central Work Shop & Central Store), Korba, Rs.2.09 crore (Gevra Area). Rs.9.32 crore in (Korba area), Rs.5.14 crore in (Kusmunda area), Rs.5.01 crore in (Bisrampur), Rs.3.65 crore (Baikunthpur); Rs.3.74 crore (Chirimiri area) and Rs.2.93 crore (Hasdeo area).
Department of Mines
2.4.14 National Aluminium Company Limited Stores and spares valuing Rs.10.43 crore had not moved over last 5 years.

MINISTRY OF COMMERCE & INDUSTRY

2.4.15 Export Credit and Guarantee Corporation of India Limited Coimbatore branch had made advances to M/s Cheran Constructions Limited - Rs.1.14 crore during 1995-97 for acquiring office premises, construction of which was still incomplete.

MINISTRY OF COMMUNICATIONS

 Department of Telecommunications
2.4.16 Videsh Sanchar Nigam Limited Existing system of review of slow moving and non-moving items required to be streamlined and documented. In case of Pune branch, the review was not carried out periodically or not reviewed at all and no corrective measures were taken during the year. Further, in Northern Region, control and record keeping of stores was required to be improved substantially.

MINISTRY OF DEFENCE

Department of Defence Production & Supplies
2.4.17 Bharat Electronics Limited No norms had been fixed for losses/shortages for raw materials.

2.4.18 Mishra Dhatu Nigam Limited

In respect of goods despatched to sub-contractors, the internal control procedure was inadequate.

MINISTRY OF ENVIRONMENT AND FORESTS

2.4.19 Andaman & Nicobar Islands Forest & Plantation development Corporation Limited

Company had no system for regular identification, monitoring and disposal of non/slow moving/obsolete stores and spares.

MINISTRY OF HEALTH AND FAMILY WELFARE

2.4.20 Hindustan Latex Limited

Present system/procedure for identifying the non-moving stores/spares/ obsolete surplus stores/finished goods/finished products required further improvement.

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES

2.4.21 Andrew Yule & Company Limited

  1. Company had not fixed any norms for losses or wastages of raw materials (except Tea Division).

  2. Inventory valuing Rs.1.70 crore (raw materials-Rs.0.78 crore, packing materials-Rs.0.25 crore and stores & spares-Rs.0.67 crore) had not moved over 5 years.

2.4.22 Braithwaite & Company Limited

Stores valuing Rs.1.68 crore had not moved over last 4 years.

2.4.22 Braithwaite Burn & Jessop Construction Company Limited

Company did not have adequate system for identifying and monitoring disposal of non-moving obsolete or surplus raw materials, stores and spares.

2.4.23 Burn Standard Company Limited

  1. Inventory valuing Rs.6.32 crore (raw materials-Rs.3.07 crore, stores-Rs.2.04 crore, finished goods-Rs.1.15 crore and work-in-progress-Rs.0.06 crore) had not moved over last 5 years.

  2. Company off-loaded few orders to sub-contractors although manufacturing facilities remained under utilised.

2.4.24 Engineering Projects (India) Limited

Advances for work amounting to Rs.15.23 crore were paid in excess of contractual obligations to Indian associates working under foreign contracts in earlier years.

2.4.25 Jessop & Company Limited

Company did not prepare age-wise analysis of non-moving, obsolete, surplus raw materials or stores and spares.

2.4.26 RBL Limited

Company had not fixed any norms for losses or wastages of raw materials used for manufacture of major products.

2.4.27 Triveni Structurals Limited

There were non-moving stores worth Rs.1.57 crore awaiting disposal for more than one year. Out of this, items worth Rs.1.12 crore were more than 3 years old.

MINISTRY OF INFORMATION TECHNOLOGY

2.4.28 National Informatics Center Services Inc.

 Economic size for purchases needed to be determined keeping in view the market requirement and fast changing environment in which the Company operated.

2.4.29 Semi-Conductors Complex Limited

 No norms were fixed for losses/wasteges of raw material during manufacturing storage and transit.

MINISTRY OF PETROLEUM AND NATURAL GAS

2.4.30 Bongaigaon Refinery and Petrochemicals Limited

  1. Stores and spares valuing Rs.4.06 crore had not been moved over last 5 years.

  2. Company was holding surplus stores and spares amounting to Rs.1.77 crore.

2.4.31 Indian Oil Corporation Limited

Provision of Rs.24.68 crore only was made against non-moving/surplus stores of Rs.247.31 crore including Rs.73.88 crore as on 31 March 2001 for item lying more than 5 years old.

2.4.32 Oil and Natural Gas Corporation Limited

  1. There was considerable delay in few cases in processing of documents relating to procurement and disposal of stores (namely goods receipt voucher and goods issue voucher) and incorporating the same in the accounts.

  2. Old balances were appearing under material-in-transit.

  3. As on 31 March 2001, stores & spares and capital stores valuing Rs.195.68 crore and Rs.59.54 crore respectively were not moved for more than two years.

MINISTRY OF POWER

2.4.33 Nathpa Jhakri Corporation Limited

Advances to the major contractors towards their claims for compensation of extension of time, were yet to be adjusted in the books of accounts.

2.4.34 North Eastern Electric Power Corporation Limited

  1. No formal policy had been introduced for procurement of stores.

  2. Company did not prepare age-wise analysis of non-moving, obsolete, surplus stores and spares.

MINISTRY OF RAILWAYS

2.4.35 Konkan Railway Corporation Limited

Corporation usually made advance payments to contractors/suppliers and recovered the advances through contractor’s/supplier’s bill. But in few cases the recoveries were postponed without sufficient reasons and recoveries were not done regularly. Moreover, in some of the cases where contractors had deserted the works, advances remained unadjusted.

MINISTRY OF TEXTILES

2.4.36 National Handloom Development Corporation

No system had been devised by the company for inspection of goods regarding its quality etc.
2.4.37 National Textile Corporation (Gujarat) Limited There was no adequate system for disposal of the wastes at Petlad Mill.

MINISTRY OF TOURISM 

2.4.38 India Tourism Development Corporation Limited

System for identifying and monitoring disposal of non-moving and surplus materials and finished goods was inadequate in units (Hotel Samrat-New Delhi, Airport Restaurant-New Delhi, Hotel Janpath-New Delhi, Lalitha Mahal Palace Hotel-Mysore and Hotel Jaipur Ashok-Jaipur).

MINISTRY OF URBAN AFFAIRS AND EMPLOYMENT

2.4.39 National Buildings Construction Corporation Limited

Advances given to contractors/suppliers of closed projects needed to be periodically reviewed and adjusted.

2.5    COSTING

Department of Bio Technology

2.5.1 Bharat Immunologicals & Biologicals Corporation Limited

  1. Cost records of the Company were under preparation and as such were incomplete.

  2. Company did not have effective system for identification of idle labour hours and idle machine hours.

MINISTRY OF CHEMICALS AND FERTILIZERS

Department of Chemicals and Petro-Chemicals

2.5.2 Rajasthan Drugs and Pharmaceuticals Limited

Company had no system for identification of idle labor and idle machine hours.

2.5.3 U.P.Drugs & Pharmaceuticals Limited

  1. Cost audit from financial year 1993-94 onwards was yet to be completed.

  2. There was no effective system for identification of idle labour hours and idle machine hours.

MINISTRY OF COAL AND MINES

 Department of Coal

2.5.4 South Eastern Coalfields Limited

No system for identification of idle labour hours and machine hour existed in Central Workshop (CWS) & Central Store(CS), Korba, Gevera area, Raigarh area, Kusmunda area, Danpuri Coal complex.

MINISTRY OF DEFENCE

Department of Defence Production & Supplies

2.5.5 Mazagaon Dock Limited

Company did not have an effective system for computing the cost of major operations, jobs, products, process and services.

2.5.6 Mishra Dhatu Nigam Limited

  1. In the absence of separate cost accounting records other than cost sheets there was no reconciliation between cost accounts and financial accounts.

  2. Company had no system to identify labour hours.

MINISTRY OF ENVIRONMENT AND FORESTS

2.5.7 Andaman & Nicobar Islands Forest & Plantation Development Corporation Limited

  1. Costing system followed by the Company was not proper.

  2. Company had no system of identification of idle labour hours.

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES
2.5.8 Bharat Brakes & Valves Limited
  1. Company did not have a system of cost accounts.
  2. Company did not have a system of identification of idle labour hours and idle machine hours.
2.5.9 Bharat Heavy Electricals Limited
  1. In Industrial Value Plant, Goindwal, although cost accounts were prepared, reconciliation with financial accounts was not done.
  2. Proper system of costing was not being followed at Insulator Plant, Jagdishpur.
  3. There was no effective system of identification of idle labour hours and idle machine hours at Central Foundry Forge Plant, Hardwar.
2.5.10 Braithwaite & Company Limited Company did not have a system of identification of idle labour hours and idle machine hours.

2.5.11 Braithwaite Burn Jessop Construction Company Limited

 Company did not have a system of identification of idle labour hours and idle machine hours.
2.5.12 Bridge & Roof Co. (India) Limited. Company had no system of identification of idle labour hours and idle machine hours at Howrah Works.
2.5.13 Burn Standard Company Limited Company did not compare idle time and idle machine hours with any standard (Burnpur, Howrah and Salem Works).
2.5.14 Instrumentation Limited, Kota Due to inadequate production load, analysis of idle machine hours/labour hours was not done by the Management.
2.5.15 Jessop & Company Limited

Company did not reconcile cost accounts with financial accounts.

MINISTRY OF INFORMATION TECHNOLOGY

 Department of Electronics

2.5.16 Broadcasting Engineering Consultancy India Limited

Company had no system of identifying idle labour.

2.5.17 Semi-Conductors Complex Limited

  1. Company did not prepare cost accounts.

  2. Company had no system for identification of idle machine hours/labour hours.

MINISTRY OF PETROLEUM AND NATURAL GAS

2.5.18 Gas Authority of India Limited

Valuation of closing stock of LPG, other petroleum products and residuary natural gas was not in accordance with Accounting Standard - 2 resulting in non-adherence of this mandatory Accounting Standard.

2.5.19 IBP Company Limited

In Business group (engineering) Nasik, no reconciliation of cost records was made with the financial books.

2.5.20 Numaligarh Refinery Limited

Company did not prepare cost accounts.

2.5.21 Oil and Natural Gas Corporation Limited

Reconciliation of cost accounts with finance accounts had not been carried out.

MINISTRY OF POWER

2.5.22 National Hydro-electric Power Corporation Limited

 Company had no effective system of identifying idle labour/machine hours.

MINISTRY OF SOCIAL JUSTICE & EMPOWERMENT

2.5.23 Artificial Limbs Manufacturing Corporation of India Limited

  1. Company followed standard costing method. However, these standards were not revised since 1991-92 and needed re-assessment.

  2. Corporation had no effective system for identification of idle labour hours and idle machine hours.

MINISTRY OF SMALL INDUSTRIES AND AGRO & RURAL INDUSTRIES

2.5.24 National Small Industries Corporation Limited

Company had not identified idle time for labour and machine hours.

MINISTRY OF STEEL

2.5.25 Bharat Refractories Limited

  1. There was no system of costing and computing cost of major operations in existence.

  2. Idle labour hours had not been identified.

2.5.26 Indian Iron and Steel Company

Idle labour hours had not been identified.

2.6    INTERNAL AUDIT

Department of Bio-Technology

2.6.1 Bharat Immunologicals and Biologicals Corporation Limited

  1. Company did not have an adequate compliance mechanism on internal audit observations.

  2. Company had no system of reporting irregularities noticed in the internal audit to the Board of Directors.

MINISTRY OF CHEMICALS AND PETROCHEMICALS

 Department of Chemicals and Petro-chemicals

2.6.2 Hindustan Organic Chemicals Limited

Internal audit needed to be strengthed (Rasayani Unit).

2.6.3 Indian Petrochemicals Corporation Limited

Scope of the internal audit needed to be widened so as to cover the following areas in detail:

  1. Entry for the captilisation of assets in the fixed assets card and valuation of machinery spares used in an item of fixed assets.

  2. Monthly reconciliation of receipt and consumption of materials between the statement of material section and the respective plants.

2.6.4 U.P. Drugs & Pharmaceuticals Limited

Internal audit system was not in existence for the last 3 years.

Department of Fertilizers

2.6.5 Fertilizers and Chemicals Travancore Limited

Internal Audit should also focus on the compliance of all the accounting standards and express their views independently.

2.6.6 The Projects and Development India Limited

Scope of internal audit needed to enlarge to be commensurate with the size and nature of business of the Company. The internal audit report needed to be submitted timely and be placed before Board of Directors or a Sub-committee thereof along with compliance report on quarterly basis.

2.6.7 National Fertilizers Limited

Internal audit system did not cover the reasons for delayed inspection of material at stores, perpetual non-identification of slow moving, non-moving and obsolete items, action taken on controllable factors attributable to the loss of production due to non-supply of feed stock by the suppliers and reasons for delay in taking decision on levy of liquidated damages.

MINISTRY OF COAL AND MINES 

Department of Coal

2.6.8 Bharat Coking Coal Limited

Coverage of internal audit required to be made specific and result oriented.

2.6.9 Central Mine Planning and Design Institute Limited

Location-wise and function-wise coverage of internal audit should be increased.

2.6.10 Eastern Coalfields Limited

Follow-up action on the internal audit report required to be improved.

2.6.11 Mahanadi Coalfields Limited

Internal audit required substantial strengthening to make it commensurate with the size and nature of its business.

Department of Mines

2.6.12 Manganese Ore India Limited

System of internal audit needed to be strengthened.

2.6.13 Mining & Allied Machinery Corporation Limited

Company did not have any internal audit system commensurate with its size and nature of its business.

2.6.14 National Aluminium Company Limited

Internal audit needed to cover more areas of expansion project activities and compliance of internal audit observations should be expedited.

2.6.15 North Eastern Development Finance Corporation Limited

Scope of internal audit needed to be enhanced.

2.6.16 West Bengal Consultancy Organisation Limited

Company was not having any internal audit set-up.

MINISTRY OF CIVIL AVIATION

2.6.17 Hotel Corporation of India Limited

Extent of coverage of the case of operations, frequency of reporting and the follow up on the internal audit observations needed to be strengthened to make it commensurate with the size of the Company and nature of its business.

MINISTRY OF COMMERCE & INDUSTRY

2.6.18 Export Credit Guarantee Corporation of India Limited

Internal audit needed to be strengthened.

2.6.19 India Trade Promotion Organisation

Internal audit system needed to be streamlined and strengthened to commensurate with the size of the business and operation of the Company.

MINISTRY OF DEFENCE

 Department of Defence Production & Supplies

2.6.20 Mazagaon Dock Limited

Internal audit needed to be strengthened.

2.6.21 Mishra Dhatu Nigam Limited

Scope and coverage of internal audit system needed to be enlarged and strengthened.

MINISTRY OF ENVIRONMENT AND FORESTS

2.6.22 Andaman & Nicobar Islands Forest & Plantation Development Corporation Limited

Internal audit system needed to be strengthened to commensurate with size of the Company and nature of its business.

MINISTRY OF FINANCE

2.6.23 BOB Capital Markets Limited

There was no internal audit system.

2.6.24 BOB Cards Limited

  1. Internal audit needed to be strengthened.

  2. Company did not have internal audit manual.

2.6.25 National Insurance Company Limited

Internal audit was not commensurate with the size, nature and business of the company.

2.6.26 Oriental Insurance Company Limited

Internal audit was not commensurate with the size, nature and business of the Company. It needed to be strengthened with particular reference to periodicity and stress on compliance.

Department of Banking

2.6.27 Zenith Securities and Investment Limited

There was no internal audit system in the Company.

MINISTRY OF HEALTH AND FAMILY WELFARE

2.6.28 Hospital Services Consultancy Corporation Limited

  1. Internal audit system needed to be strengthened, particularly relating to income recognition, control of over billing and placing purchase orders, to make them commensurate with the size and business of the organisation.

  2. There was no internal audit manual in the Company.

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES

2.6.29 Bharat Heavy Electricals Limited

No internal audit was carried out in respect of foreign sites.

2.6.30 Braithwaite & Co. Limited

Scope of internal audit needed to be increased.

2.6.31 Braithwaite Burn & Jessop Construction Company Limited

Company did not have Internal Audit system.

2.6.32 Bridge & Roof Co. (India) Limited

Internal audit needed to be strengthened to make it more effective and commensurate with the size of the Company.

2.6.33 Burn Standard Company Limited

Internal audit system needed to be extended in respect of scrutiny of receivables and payables.

2.6.34 Cement Corporation of India Limited

There was no internal audit system in the Company.

2.6.35 Engineering Projects (India) Limited

  1. Internal audit system and a manual for the same had not been revised/updated for the past many years.

  2. Scope and coverage of the internal audit system was not adequate and not commensurate with the size of the Company.

  3. Head of the internal audit department was directly reporting to Director (Finance) instead of the Board/Chairman cum Managing Director.

2.6.36 Heavy Engineering Corporation Limited

Internal audit system was not commensurate with the size of Company and nature of its business.

2.6.37 Jessop & Co. Limited

Internal audit coverage was not adequate.

2.6.38 Richardson and Cruddas (1972) Limited

Internal audit needed to be strengthened.

2.6.39 Triveni Structurals Limited

Internal audit system was not in existence during the year under audit.

MINISTRY OF HOME AFFAIRS

2.6.40 Cross Country Hotels (Diu) Limited

There was no internal audit system in the Company.

2.6.41 Dadar and Nagar Haveli ST &SC, OBC & Minorities Financial & Development Corporation Limited

Internal audit was required to be strengthened.

MINISTRY OF HUMAN RESOURCES DEVELOPMENT & SCIENCE AND TECHNOLOGY

2.6.42 Educational Consultants (India) Limited

System of internal audit needed to be strengthened. It was done on sample basis, which was inadequate in terms of the size and nature of the business of the Company. The Company did not have any system of compliance of internal audit observations.

MINISTRY OF INFORMATION AND BROADCASTING

2.6.43 Broadcast Engineering Consultants of India Limited

  1. Periodicity of report had not been well defined. The report should have been submitted at least on quarterly basis.

  2. Follow-up of action taken on the previous report was not recorded in the internal audit report.

MINISTRY OF INFORMATION TECHNOLOGY

2.6.44 National Informatics Centre Services Inc.

Company did not have any internal audit system.

2.6.45 Semi-Conductors Complex Limited Company had no system of submitting the internal audit reports to the Board of Directors.

MINISTRY OF NON-CONVENTIONAL ENERGY SOURCES

2.6.46 Indian Renewable Energy Development Agency Limited

Company did not have a system of reporting the major irregularties to the Board of Directors.

MINISTRY OF PETROLEUM AND NATURAL GAS

2.6.47 Bongaigaon Refinery & Petrochemicals Limited

Internal audit system needed to be strengthened to make it commensurate with the size and nature of the business.

2.6.48 Certification Engineers International Limited

Internal audit system was deficient in scope and coverage of work and its reporting. The internal audit was conducted by the internal audit department of Engineers India Limited, the holding company.

2.6.49 Engineers India Limited

  1. Scope and coverage of internal audit needed to be improved and strengthened so as to cover all aspects of the business operations and in a more detailed manner to make it commensurate with the size of the Company and nature of its business. This needed to be strengthened particularly in the area of billing and sundry debtors.

  2. Compliance mechanism on the internal audit observations needed to be further strengthened.

2.6.50 IBP Co. Limited

Internal audit conducted at the Western Region, Mumbai was not sufficient to cover all the areas of the Region.

2.6.51 Oil and Natural Gas Corporation Limited

Compliance mechanism on internal audit recommendations needed to be strengthened further.

MINISTRY OF POWER

2.6.52 Nathpa Jhakri Power Corporation Limited

Internal audit system was required to be strengthened and elaborated with respect to the scope of work involved.

2.6.53 National Hydro-electric Power Corporation Limited

Process of settlement of the observations of internal audit was very slow. In respect of Uri-II, Sawalkot, Kishanganga, Baglihar, internal audit was not carried out.

2.6.54 National Thermal Power Corporation Limited

There was no system of seeking compliance of the observations of internal audit reports.

2.6.55 Power Grid Corporation of India Limited

Compliance and implementation mechanism in respect of internal audit reports needed to be strengthened.

2.6.56 Rural Electrification Corporation Limited

  1. Company had no internal audit manual.

  2. Internal audit system was not commensurate with the size and nature of its business. Scope of its coverage needed to be enhanced considerably to cover all areas.

2.6.57 Tehri Hydro Development Corporation Limited

Considering the size and nature of the activities of the Corporation, frequency of the internal audit as well as its coverage needed to be enlarged particularly in respect of construction work-in-progress.

MINISTRY OF RAILWAYS

2.6.58 Indian Railway Finance Corporation Limited

Scope and extent of internal audit needed to be broadened to make it commensurate with the Company’s size and the nature of business. The Company did not have any internal audit manual.

2.6.59 IRCON International Limited

Internal audit system needed to be further strengthened to make it commensurate with the Company’s size and nature of the business.

2.6.60 Konkan Railway Corporation Limited

Internal audit system needed to be strengthened to make it commensurate with the size and nature of its business.

2.6.61 Mumbai Railway Vikas Corporation Limited

No internal audit was conducted during the year.

MINISTRY OF SMALL INDUSTRIES & AGRO AND RURAL INDUSTRIES

2.6.62 National Small Industries Corporation Limited

Internal audit system required further strengthening and streamlining to cover all areas of operations of the Company including the Head Office.

MINISTRY OF SOCIAL JUSTICE AND EMPOWERMENT

2.6.63 National Minorities Development and Finance Corporation Limited

Internal audit system in certain areas like vouching of expenditure and checking of revenue generation needed to be strengthened.

MINISTRY OF STEEL

2.6.64 Steel Authority of India Limited

Internal audit needed to be further strengthened and its scope needed to be enlarged to cover all the locations and operational/financial areas.

MINISTRY OF SURFACE TRANSPORT

2.6.65 Cochin Shipyard Limited

Scope and extent of coverage of the existing internal audit system of the company needed to be enlarged to make it commensurate with the size and nature of the business of the Company.

2.6.66 Indian Road Construction Corporation Limited

During the year 2000-2001, no internal audit was conducted.

2.6.67 The Shipping Corporation of India Limited

Internal audit needed to be strengthened.

MINISTRY OF URBAN AFFAIRS AND EMPLOYMENT

2.6.75 National Buildings Construction Corporation Limited

During the year, the internal audit of 75 out of 232 units was conducted. Keeping in view of the size and nature of activities, the coverage needed to be increased.

2.7    AUDIT COMMITTE

As pointed out by the Statutory Auditors, a large number of PSUs did not have an Audit Committee of the Board of Directors. A Ministry/Dipartment-wise list of all such PSUs is given as Annexure-IV.

2.8    GENERAL

Department of Bio-Technology

2.8.1 Bharat Immunologicals & Biological Corporations Limited

Selling expenses shown as incurred by the Company during the year 2000-2001 did not have any documentary support/evidence.

MINISTRY OF CHEMICALS & PETROCHEMICALS

Department of Chemicals & Petrochemicals

2.8.2 Hindustan Antibiotics Limited

An amount of Rs.49.95 lakh was yet to be realised against exports effected during January 1994 to March 1996.

2.8.3 Indian Petrochemical Corporation Limited

There was scope for optimisation of manpower with better work practices, higher level of technology, continuous training, safety standards and increased level of expertise and confidence.
2.8.4 U.P. Drugs & Pharmaceuticals Limited
  1. Segment-wise account and profit and loss statements were not prepared.
  2. Anti-pollution devices were not installed to the required level due to financial constraints.
  3. Norms about man-power were not fixed. About 100 employees were considered surplus by BIFR. VRS had been introduced but due to non-receipt of funds from National Renewal Fund (NRF), it could not be implemented.
  4. No norms/standards were set for rejection to production/sales.

Department of Fertilizers

2.8.5 The Projects and Development India Limited

Following deficiencies were noted in the computerised system of operation of the Company:

  1. There was no uniformity in the accounting package being used in different units. Ledgers/sub-ledgers did not give narration making it difficult to scrutinise the same.

  2. In the Catalyst Division of the Company, 124 employees were surplus.

  3. Outstanding amount of service tax pertaining to the agreements executed prior to the introduction of the service tax should be shown separately in the books of accounts as service tax recoverable. The current practice of clubbing it with debtors made it difficult to ascertain the value of outstanding service tax.

MINISTRY OF CIVIL AVIATION

2.8.6 Hotel Corporation of India Limited

  1. Company did not prepare segment wise Profit & Loss account.

  2. Company had not fixed any norms for the manpower employed.

MINISTRY OF COMMERCE & INDUSTRY
2.8.7 Indian Trade Promotion Organisation
  1. Company had been exempted from income tax. Despite exemption, TDS was being deducted by other parties. During the last two years TDS amounting to Rs.40.67 lakh had been deducted by other parties.
  2. Company had not made any provision for a strong room for tickets lying in the stores. The Company had not yet destroyed old tickets.

MINISTRY OF COMMUNICATIONS

Department of Telecommunications

2.8.8 Videsh Sanchar Nigam Limited

Debts amounting to Rs.7.06 crore as of March 2001 became time-barred under the Limitation Act, 1963 for lack of timely legal action by the Company.

MINISTRY OF HEAVY INDUSTRY & PUBLIC ENTERPRISES

2.8.9 Burn Standard Company Limited

No energy audit was conducted by any specialised agency in respect of Howrah, Burnpur and Salem Units of the Company.

2.8.10 Engineering Projects (India) Limited

  1. Income from escalation and extra work was not provided in the contract. Deemed export benefits and insurance claims were accounted for on cash basis. While the Company was charging the cost of escalation and extra work to the revenue in the year in which such expenditure was incurred, there was a mis-match of revenue with the expenditure incurred.

  2. Sale proceeds on account of disposal of left out material and spares & stores were credited to miscellaneous income instead of reducing them from the cost of the contracts.

  3. Profit/loss on account of exchange variations was accounted for on final settlement of all claims/liabilities with clients/associates of each contract. Till final settlement, exchange differences were carried under the head Exchange Variation Reserve. In some of the cases, claims of very nominal amounts were pending, but still the exchange variations were not transferred to the Profit and Loss account.

2.8.11 Instrumentation Limited, Kota

  1. Company had not signed any Memorandum of Understanding with the Ministry.

  2. There was no norm for manpower employment. In the absence of norms, the excess could not be determined.

  3. Company was not regularly remitting provident fund dues. It had not paid damages for late payment of these dues even though provision for damages had been made in the accounts.

2.8.12 Sambhar Salt Limited

Company has not prepared the segment-wise Profit and Loss account.

2.8.13 Scooters India Limited

  1. Company did not prepare segment-wise accounts and Profit and loss account thereof.

  2. Although Voluntary Retirement Scheme existed in the Company, it still had surplus manpower of 270.

2.8.14 Triveni Structurals Limited

No disclosure in accounts was made in respect of supplies made, where liquidated damages stand recovered by the customers.

MINISTRY OF PETROLEUM AND NATURAL GAS

2.8.15 Bharat Petroleum Corporation Limited

  1. Muzaffarpur depot, Railway siding depot, Angul and facilities at Mid-east Integrated Steel Limited were lying idle for a long time.

  2. Company did not prepare segment-wise Profit and Loss account.

2.8.16 Gas Authority of India Limited

  1. Debtors and profit were overstated by Rs.70.61 crore due to non-provision of doubtful debts in case of one of the customers i.e. M/s. Essar Steels Ltd., at Hazira.

  2. Company had not charged off to revenue, exchange rate difference on foreign currency loan taken from J-Exim Bank which was disbursed on 22 June 1998 after acquisition of relevant assets, in contravention of AS-11, which resulted in over-statement of fixed assets & profit by Rs.60.62 crore.

MINISTRY OF POWER

2.8.17 National Hydro-electric Power Corporation Limited

  1. No energy audit was conducted by any specialised agency.

  2. Position of manpower declared surplus at projects needed to be reviewed.

2.8.18 Power Grid Corporation of India Limited

Company had surplus employees in the non-executive cadre.

2.8.19 Rural Electrification Corporation Limited

  1. Suitable steps were required to be taken to recover the overdue amounts from the guarantors of the loans particularly in case of Rural Electricity Co-operative societies which were under liquidation.

  2. Monitoring of non-performing loans and advances needed to be strengthened.

MINISTRY OF RAILWAYS

2.8.20 Container Corporation of India Limited

Segment-wise Profit & Loss account, to comply with the requirements of AS 17 on Segment Reporting was not being prepared.

2.8.21 Konkan Railway Corporation Limited

Corporation prepared segment-wise accounts, but Profit & Loss statement was prepared on consolidated basis. Hence it was not possible to identify loss-making segments.

MINISTRY OF SOCIAL JUSTICE & EMPOWERMENT

2.8.22 Artificial Limbs Manufacturing Corporation of India Limited

  1. Company did not prepare segment-wise account and Profit and Loss statement.

  2. Norms fixed in earlier years for losses/wastages of raw materials/stores had not been revised since long.

MINISTRY OF STEEL

2.8.23 Ferro Scrap Nigam Limited

Company was not preparing segment-wise profit & loss account.
2.8.24 Steel Authority of India Limited Internal control in respect of areas like awarding the consultancy contracts, old capital expenditure lying under the head work-in-progress, proper confirmation of debts/claims/advances, unlinked debit/credit balance/stores/spares lying in stock in transit for a considerable period, reconciliation of finished goods as per stock records, capitalisation of manpower cost, etc. needed to be strengthened.

MINISTRY OF SURFACE TRANSPORT

2.8.25 Cochin Shipyard Limited

In ship repair department, wherever the purchases were made from the original equipment manufacturers and in the case of emergency purchases, the normal procedure of inviting tenders was not followed.

2.8.26 Indian Road Construction Corporation Limited

Company had not prepared segment-wise accounts.

MINISTRY OF TEXTILES

2.8.27 National Textiles Corporation Limited

  1. As per Government directives, subsidy on sales under Mill Gate Price Scheme for Rs.6.50 crore had been accounted for on accrual basis, even though claims worth Rs.3.25 crore were pending for submission as on 31 March 2001 to Government of India.

  2. Internal control procedure with regard to purchase of stores and materials, equipment and other assets and sale of goods needed further strengthening.

  3. There was no system for acknowledgement of goods by the user agency at proper level.

  4. An amount of Rs.3.45 crore was recoverable from the various participants of marketing complex towards purchase cost (Rs.3.28 crore) and of decoration cost (Rs.16.88 lakh) as on 31 March 2001.

FOLLOW UP ACTION ON PREVIOUS REPORTS

As per Committee on Public Undertakings (COPU)'s instructions, Ministries/Departments are required to submit to the Committee the follow up action taken notes duly vetted by Audit in respect of comments/paragraphs included in the Reports of C&AG of India No.2 (PSUs) presented to Parliament within six months from the date of presentation of the relevant Audit Reports.

A review had revealed that inspite of reminders, the remedial/corrective action taken notes (ATNs) on 655 comments/paragraphs on various PSUs contained in the last five years’ Audit Reports No.2 (PSUs) under the administrative control of the Ministry had not been forwarded to Audit for vetting. The details of outstanding ATNs are given in the Report of C&AG of India No.3 (PSUs) of 2002.

New Delhi
Dated: 28 Feburary 2002

T.S.NARASIMHAN
Deputy Comptroller and Auditor General Cum
Chairman, Audit Board

Countersigned
New Delhi
Dated: 28 Feburary 2002

(V.K.SHUNGLU)
Comptroller and Auditor General of India